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spk03: Good day and welcome to the fourth quarter and year-end fiscal 2022 Keytronic Corporation Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Brett Larson. Please go ahead, sir.
spk02: Good afternoon, everyone. I am Brett Larson, Chief Financial Officer of Keytronic. I would like to thank everyone for joining us today for our investor conference call. Joining me here in the Spokane Valley headquarters is Craig Gates, our President and Chief Executive Officer. As always, I would like to remind you that during the course of this call, we might make projections or other forward-looking statements regarding future events of the company's future financial performance. Please remember that such statements are only predictions. Actual events or results may differ materially. For more information, you may review the risk factors outlined in the documents the company has filed with the SEC, specifically our latest 10-K Quarterly 10 Qs and 8 Ks. Please note on this call we will discuss historical, financial, and other statistical information regarding our business and operations. Some of this information is included in today's press release, and a recorded version of this call will be available on our website. Today we released our results for the quarter end, year ended, July 2nd, 2022. For the fourth quarter of fiscal year 2022, we reported total revenue of $126.2 million compared to $132.6 million in the same period of fiscal year 2021. For the full fiscal year of 2022, total revenue was $531.8 million, up 3% from $518.7 million for the fiscal year of 2021. During fiscal year 2022, we added significant new programs and our backlog for orders reached historic highs. However, constraints in the global supply chain and transportation issues limited production throughout the year. During the fourth quarter of fiscal year 2022, the results were impacted by intermittent parts supply and factory downtime. Our facilities in Shanghai, China were closed for most of the fourth quarter. due to a government-mandated COVID shutdown. While the reopening of our China facility took longer than anticipated, operations have since resumed. Also impacting the results of the fourth quarter were legal costs related specifically to the SEC's review of last year's whistleblower complaint. These totaled 8 cents per diluted share during the quarter, though we estimate legal costs to decrease in coming periods. For the fourth quarter of fiscal year 2022, our gross margin was 9.3%. An operating margin was 1.8% compared to a gross margin of 7.8% and an operating margin of 1.1% in the same period of fiscal year 2021. The increased margins primarily reflect an increase in sales pricing to recoup higher material and labor costs that we incurred throughout the fiscal year. While the fourth quarter was a significant improvement of gross margin, we expect margins to return to historical levels in coming quarters. For the fourth quarter of fiscal year 2022, net income was $1 million, or 9 cents per share, up from $0.2 million, or 2 cents per share, for the same period of fiscal year 2021. For the full year of fiscal year 2022, net income was $3.4 million, or 31 cents per share, compared to $4.3 million, or 39 cents per share, for fiscal year 2021. The year-over-year change is predominantly a result of increased legal expenses and higher interest expense. Turning to the balance sheet, we continue to maintain a strong financial position. Despite supply chain and COVID-related production delays throughout fiscal year 2022, and the continued rampant transfer of new programs, we managed to end the year with total working capital of $176.3 million in a current ratio of 2 to 1. For our year, our inventory increased by $18.4 million, or roughly 13%. We are carefully balancing customer demand and the likelihood of successfully bringing in parts in time for planned production. The state of the worldwide supply chain now requires that we look out much further in the future than in historical periods. In future quarters, we expect to see our net inventory turns slowly improve to more historical levels. At the end of the year, trade receivables were up by about $25.6 million from the end of the prior year, and our DSOs also increased to about 88 days, up from 76 days which reflects timing of shipments to customers with extended terms and some delays in payments from customers who were impacted by pandemic-related slowdowns and restarts in their respective markets. Total capital expenditures were about $6.8 million for fiscal year 2022, down from $10.6 million in the prior year. We are keeping a careful eye on capital expenditures However, we plan to continue to invest selectively in our production equipment, SMT equipment, and plastic molding capabilities, utilizing leasing facilities, as well as make efficiency improvements to prepare for growth and add capacity. Despite significant customer backlog, we expect that the ongoing disruptions from the global supply chain will continue to significantly limit production and adversely impact operating efficiencies. For the first quarter of fiscal year 2023, we expect to report revenues of approximately $125 million to $135 million and earnings of approximately 5 to 10 cents per diluted share. We're working closely with our customers, key suppliers, and employees to minimize the effects of delays attributable to supply chain constraints higher cost of labor and component costs, freight and logistics, and limited availability of key components. While our facilities in the US, Mexico, China, and Vietnam are currently operating, and we are following current health guidelines, uncertainty to the possibility of future temporary closures, customer fluctuations in demand and costs, future supply chain disruptions, and other potential factors could significantly impact operations in coming periods. In summary, we continue to grow our pipeline of new sales prospects and continue to increase our customer demand to unprecedented levels for Keytronic. Despite the fact that supply chain disruptions and the pandemic continued to impact our business throughout fiscal year 2022 and remain risks in future periods, We are encouraged by our prospects for growth and new customer programs for fiscal year 2023 and beyond. The overall financial health of the company appears strong, and we believe that we are increasingly well-positioned to win new EMS programs and to continue to profitably expand our business over the longer term. That's it for me, Craig.
spk06: Okay, thanks, Brett. Despite facing continuing business challenges throughout the year, including worldwide component shortages, transportation bottlenecks, the global pandemic, and government shutdowns, our annual revenue was $531.8 million, the highest in our corporate history. Our order backlog also reached historic highs. Without the supply chain disruptions, our revenue could have exceeded $700 million. Global logistics problems, the war in Europe, and China-U.S. geopolitical tensions continue to drive OEMs to examine their traditional outsourcing strategies. These customers increasingly realize that they have become overly dependent upon their China-based contract manufacturers for not only product, but also for design and logistics services. We predicted this dynamic years ago and built Keytronic to be the ideal solution for customers as they move to reduce this extreme risk. As you know, we acquired facilities in Mexico over the last decade at bargain prices while conventional wisdom drove a flight of manufacturing to China. We now have a campus of over 1.1 million square feet in Juarez, most of which is contiguously located in nine facilities acquired over time. Moreover, we maintained a detailed and current analysis of Asian locales over the past seven years. When the China-US relationship became too fraught, we were ready to open our Vietnam facility within only eight months. As we saw many OEMs abdicate their design and documentation capabilities to Asia-based contract manufacturers, we invested in our design team and its CAD tools. As a result, many of our large and medium-sized manufacturing program wins are predicated on Keytronic's deep and broad design services. And, once we have completed a design and ramped it into production, our knowledge of a program's specific design challenges makes that business extremely sticky. We also invested in vertical integration and manufacturing process knowledge, including a wide range of plastic molding, injection, blow, gas assist, multi-shot, as well as PCB assembly, metal forming, painting and coating, complex high-volume automated assembly, and the design, construction, and operation of complicated test equipment. This expertise sets Keytronic apart from our competitors of a similar size. As a result, a customer looking to leave their contract manufacturer finds a one-stop shop in Keytronic. which makes the transition to our facilities much less risky than cobbling together a group of providers, each limited to a portion of the value chain. We understood that our Shanghai plant would remain critical to our success, but in a reimagined form. Our Shanghai plant has added capabilities in management, staff, and systems that allow it to serve Chinese customers directly. As this segment grew, Shanghai has replaced the business that we moved to Vietnam. Meanwhile, our procurement group in Shanghai, which serves the entire corporation, became even more critical as supply issues crippled our competitors without boots on the ground in China. Eight years ago, we acquired three U.S. manufacturing sites that, as anticipated, have benefited greatly from the macro forces driving business back to North America. The fourth quarter of fiscal 2022 saw these U.S.-based facilities setting records for revenue and for backlog of new and longstanding businesses. The combination of these U.S. plants and our expansive design capabilities is proving to be extremely efficient in capturing new business. The result of our strategic foresight in execution is a wave of new business that gets larger every day. While the pandemic and supply shortages have constricted both our top and bottom line performance, obscuring the amplitude and velocity of that wave of new business, the fact that we actually set a corporate record for revenue in the midst of unprecedented supply issues is an indicator of our growing momentum. During fiscal 2022, we successfully expanded our customer base and won new programs involving industrial testing equipment, medical diagnostic products, pharmaceutical water treatment, industrial robots, lighting control, disinfection, food production, energy management systems, outdoor recreation, RFID, industrial connectivity, electric mobility, audio products, GPS devices, utility meters, personal safety devices, innovative internet solutions, and finally, outdoor power equipment. Once fully ramped, this power equipment program alone could contribute approximately $80 million in annual revenue. Moving into fiscal 2023, we still confront significant uncertainty and disruptions to global supply chains for key components. At the same time, the pressures on our customer base to reduce their Asian supply concentration remain very powerful. Demand for onshoring of production to North America continues to grow, With no foreseeable end to tariffs, intensifying political tensions between China and U.S., and increasing Asian production costs and time to market, we believe these macroeconomic factors will continue to drive a significant increase to our business and further validate our strategy. While we don't expect supply chain challenges to be fully resolved in the near term, we see the potential for significant growth in fiscal 2023 and beyond. In closing, I want to emphasize that the execution of our strategy was made possible not only by our investments in plants and equipment, but even more so by the skills, local knowledge, and talents of our people. I want to thank our exceptional employees for their dedication and hard work during this challenging time and our shareholders for their continued support. This concludes the formal portion of our presentation. Brett and I will now be pleased to answer your questions.
spk03: Thank you, Seth. If you would like to ask a question, please signal by pressing star 1 on your telephone keypad. If you are using a speakerphone, please make sure your mute function is turned off to allow your signal to reach to our equipment. Again, press star 1 to ask a question. We'll pause for just a moment to allow everyone the opportunity to signal for questions. We will take the first question from Bill Deslam from Titan Capital. Your line is open. Please go ahead.
spk01: Thank you. Would you please walk through the five new programs that you won this quarter and the size of each of them, please?
spk06: Bill, I'm going to do you a favor, and I'm going to go through all those programs I listed with their current estimates because some of those have changed since we announced them in various quarters.
spk01: All right.
spk06: You ready? You ready?
spk01: Probably not, but I'm going to try.
spk06: Okay. Industrial testing equipment was $10. Medical diagnostics is $7 million. Water treatment is $2 million. Industrial robots are $8 million. Lighting control is $6 million. Disinfection is $5 million. Food production is $5 million. Energy management systems is $4. Outdoor recreation is $20. RFID is $4. Industrial connectivity is $2. Electric mobility is $2. Audio products is $20. GPS devices is $10. Utility meters is four. Personal safety devices is four. Internet solutions is four. And the power equipment is 80.
spk01: Thank you very much. So the outdoor equipment, that's 20. And the audio that you announced this quarter, that's 20. Would you please talk to those, just given the magnitude? And I know we've talked about the power equipment of 80 million in the past, so I'll skip that one.
spk06: So we've got to mix up somewhere. You've got the outdoor power equipment is 80, and we had outdoor recreation that was 20, and audio products that are 20.
spk01: Outdoor rec is, yeah, outdoor rec, I'm sorry, wrong outdoors, and then the audio, please.
spk06: And so what's the question on those two?
spk01: Yeah, would you just discuss each of those, just given their size and how important they could be to the company? A little bit more about them, whatever you can share, and with their unique characteristics, why you won those pieces of business, that would also be helpful.
spk06: Both of them share the fact that they're company was trying to move out of China into the States. One of them was accelerated by the fact that they have a final assembly factory in Juarez down the street from us. Neither of these two had anything to do with our actual design services, both of them had to do with our design for manufacturability analysis capabilities. Both of them are large established OEMs that have been around for decades.
spk01: Given that last comment, are these both programs that if you are successful with that they would give you additional business or the opportunity for additional business that could be equally as or larger?
spk06: Yes. In fact, the outdoor recreation one has grown since we first announced it.
spk01: Great. Congratulations. And Shanghai, well, actually, is there anything else with any of those wins this year that you would like to specially call out?
spk05: Nope.
spk01: Let's jump to Shanghai then, please. How much did the closure of that facility this quarter, how much revenue did that cost you?
spk05: It was about $7 or $8 million. And that facility was...
spk01: fully open starting when again uh mid-september september sorry bad month yeah mid-june there you go let's try again yeah mid-june thanks bill all right i'm actually going to craig in this case say thank you for asking the question i was a little puzzled myself Maybe this call would go a lot better if you just asked the questions.
spk02: Well, I'm already thinking ahead, Del. I'm already thinking ahead.
spk01: Hopefully not to them closing again and then reopening in mid-September.
spk02: It was mid-June, so we got about two, two-and-a-half weeks of production from our Shanghai facility.
spk01: Okay. Well, that's just helpful. And they are now back up and fully – fully operational and ramped. Are we understanding that correctly?
spk02: That is correct.
spk01: Okay, great. Thank you. And then I believe in the opening remarks, Craig, you had said that had the supply chain difficulties not been in place, that you could have shipped $700 million of business. And by my math, that's $175 million per quarter. and I don't remember at any point in the last year a reference to having demand up at that level. So I guess I have two questions tied to that. Was there a level of conservatism that was employed before, or does this imply that demand has accelerated as the year has progressed and increased? And so this really isn't linear at 175. It would be more like that 150 early on in the year and has moved up closer to 200 per quarter now as we sit today.
spk06: I can't recall which quarters were how much, Bill. As we went back and looked over it all, we just looked at unfulfilled possibilities by customer. That's how we came up with the number. So I don't have it by month or by quarter. I'd say it's mildly accelerating.
spk01: And mildly accelerating?
spk05: Yeah.
spk01: All right. That's helpful. I appreciate it, and I will step back in and let others ask.
spk05: Okay. Thank you.
spk03: We'll take the next question from Sheldon Grodzki from Grodzki Associates. Your line is open. Please go ahead.
spk00: Good afternoon, everyone. Unfortunately, it feels a little bit like Groundhog Day, with every quarter seeming to have the same issues. But let me address a couple of things. First, you mentioned what the SEC investigation cost you in the fourth quarter, and you mentioned that you expect the expenses from the SEC investigation to diminish. Do we have a number for the course for the whole year?
spk05: Yeah.
spk00: What's that?
spk02: Sheldon, that would roughly be in excess of 25 cents.
spk00: Well, that's a lot. And that number is expected to be smaller next year, if I interpret everything I've heard so far.
spk02: Based on what we know today, yes.
spk00: Okay. Now, you said something about Shanghai becoming more important and maybe Vietnam becoming less important. Did I misinterpret what I heard there?
spk06: You misinterpreted that. You misinterpreted that. So what we were trying to say is that Shanghai has not become less important. They're not a lame duck facility. Their role has changed within the company. and their market has changed. So they were mainly in existence to provide outsourcing for European and North American companies, and the products they built mainly came back to North America and Europe. Today they are mainly providing services to companies that are in Asia and some small portion in Europe, and most of the products they build are staying within Asia and Europe. and their role in procuring parts for the rest of the company has remained strong and in a few ways has increased in breadth as getting parts became more and more difficult over the last two years.
spk05: And what did you say about Vietnam?
spk06: Vietnam continues to be one of the places people look as they're trying to figure out a way to get out of China and reduce their risk and yet ship into other Asian companies and countries, I mean, into Europe. So Vietnam's growth in particular was really throttled by the Virus and the government's reaction to the virus And that they clamped down really hard on any visitors And that is just really started to loosen in the last couple of months So even though we've added business into Vietnam It could have been quite a bit more if people have been allowed to travel and go see the facility I guess I'll let that be it for now
spk05: Thanks.
spk03: Next question from George Millas from MKH Management. Your line is open. Please go ahead.
spk05: Okay, great.
spk04: Thanks. Hi, Craig. Hi, Brett. Hi, George. Hi. Can you give us some cover on the gross margin? It went up 100 basis points sequentially and maybe trying to help us understand why and also maybe more importantly, You're saying it's coming back to historical levels. So what do you mean by historical levels and why is it coming back now?
spk02: So, George, I think in this quarter specifically, there was some recouping of sales price increases of costs that had incurred in previous quarters. So, you know, the 9.3%, well, you know, significantly higher than where we've been running of you know, close to 8.3 or 8.5%. We don't anticipate that to repeat prospectively. We expect to be back to around 8.5% in this quarter. You know, that's not where we want to end up. We want to continue to grow that, and with some additional volume, we hope to do that. But this was a bit better quarter than, than what we expect to do prospectively.
spk04: Okay. Just to understand, it means that you actually were able to get some payments for shipments that were in prior course, some compensation for that, let's say.
spk02: That is correct. That is correct. Okay.
spk04: And was that from a few customers or was it pretty broad?
spk05: I'd say it was from a handful of customers. Okay.
spk04: And I don't know to what extent you can elaborate on that, but, you know, why certain customers, why not others where there's some special circumstances?
spk02: Yeah, there were some special circumstances involved with these where, you know, the pricing negotiations took longer than what we had anticipated, but we were able to recoup retroactively for some shipments that had been made in earlier quarters.
spk04: Okay, great. That helps explain it. Okay, great. Can you, Brett, can you give us the exact amount of the legal cost in the quarter and in the year, but in dollar terms that flows through the OPEX?
spk02: Yeah, I'm just going to give you rough estimates of approximately a million dollars in Q4, just over a million dollars in Q4, and in excess of close to $3.5 million for the year.
spk04: Okay. And is there a particular reason why Q4 was higher? I was under the expectation. that legal costs had peaked and they were coming down, but that's not the case.
spk02: Well, they're tough to forecast. There was more activity that occurred during the fourth quarter. You know, based on where we're at today and what we've gone through, our expectation is those legal fees should reduce over time.
spk04: Okay. Okay, great. And then if I look at the OPEX,
spk05: even if I normalize for the legal cost, they were up significantly. Is there a particular reason for that?
spk02: There were some, as you know, there's over a million dollars in legal costs going through the SG&A.
spk04: Yeah, but even if you think that out, they were up like almost 10% sequentially.
spk02: There also were some year-end bonuses that accrued during the quarter. Okay. If you look year-to-year, predominantly the increase in operating expenses by far were the increased legal fees.
spk04: Yeah. Yeah. Okay, great. And maybe a question for Craig. Craig, did you guys shed a lot of business in fiscal 22? I mean, you're in a situation where you've grown a great deal, you're able to sort of prove some customers that are either unprofitable or difficult to deal with. Can you help us understand if you sort of went through sort of a pruning process and you've sold, how much was that?
spk06: I would say that it's been less of a pruning process and it's been more of a equalization of the business relationship between those customers and us that perhaps weren't acting exactly the way we would like them to act. So as Brett talked about, we've raised prices. We have implemented terms for payments. We have implemented inventory investments by the customers in their own inventory. I'd say we've done more of that than we have of actually pruning customers and moving them out. So the majority of our customers that I would say had been on our problem customer list are no longer on the list, not because we, so to speak, fired them, but because they came to value the relationship correctly and are now acting the right way.
spk05: Okay, that sounds like it was a lot of work, but... Seems like you've had some good success there. Yeah, I think so. Okay, great. Thanks. I'll go back in the queue. Okay. Thanks, George.
spk03: We'll take the follow-up question from Bill Desilam. Your line is open. Please go ahead.
spk01: Thank you. A couple of additional questions. First of all, relative to the supply chain, Do you have a sense that it's improving at all or worsening for that matter?
spk06: Our belief right now is that it has slightly improved. So there are ICs that we just couldn't get no matter how much money our customer was willing to spend that we've been able to get in the last couple of months. suppliers that wouldn't even talk to us will now answer the phone and have a discussion. And in general, it just seems to be from various bits and drabs of data that it is getting better. I think it's as much because Our OEMs, our customers, and everybody else's have come to grips with the fact that they need to forecast in 24 months if they're going to get parts. I don't think any new capacity has come online. There has been some, I guess, overall softening in the market, although we haven't really seen any overall softening in our demand from our longstanding customers. in a broad sense. We've seen demand move around from the country we were originally building parts for is now dropping in demand and a country that originally didn't have a lot of demand has increased. But right now we don't see in our order book the signs of recession that we all to a certain degree expect is coming.
spk01: That's helpful. And then you referenced, I think, again, in the opening remarks relative to the U.S. operations and those plants. And I think in prior call you had talked about a significant amount of new business moving into the U.S. facilities. Would you please talk around what's happening in that's leading to that big ramp up. What the magnitude of the ramp up is, again, I think you mentioned it before, but remind us if you would, please. And given what I would think that would lead to some pretty significant incremental margins, just given that you already have decent cost absorption there, what the implications could be to the bottom line.
spk05: Okay.
spk06: The drivers behind that are, as we stated, people trying to move out of China, people who probably shouldn't have been in China in the first place because they don't have the big $20, $30, $40, $50 million programs that are going into Juarez. Some new products that are being developed that are benefiting from our design capabilities that people used to just... Outsourced to their CM in China But a lot of products that already existed that are coming back here It's a The those three plants ran around 115 to 120 million for the last four four years or so They could be as high as 160 170 In the next 12 months, if everything comes to pass the way it should, and that does make a nice bump in profit for that group of plants.
spk01: And, Craig, you said $120, $125 million going up to, did you say $170? Yeah, I said $115 to $120, maybe going up to size $170. Mm-hmm. So really the way to think about this is the incremental margin on 50 to 55 million. And is there really much in terms of incremental SG&A, or is it truly an incremental gross margin that we're going to be looking at there?
spk06: The problem is not, I mean, it's wonderful, but it's not the promised land because the cost of employees in the states has skyrocketed too. So both getting people to work and paying them enough to keep them is, as you know, a problem in the States. Right.
spk01: So it's not all going to be acre and a large and it drops to the bottom line. Great reminder. Thank you. And congratulations on having those plants see additional revenue. Are you going to be needing... needing CapEx at some point here to expand those facilities, or do you have the capacity to take on that business already?
spk06: For the vast majority of that answer, we do not need more capital. There may be an SMT line here or there, but it's not like we need to go out and find another facility.
spk02: We will be adding some shifts, but to Craig's point, For a large part of it, we've got equipment capacity.
spk06: I don't know if you remember, but one of the facilities was a state-owned facility that we leased for, I think it's $1 a year or something like that. $60 a year. That was almost three-quarters empty, and that's getting nicely filled up now.
spk05: Congratulations, and thank you both for the perspective. Yep.
spk03: Again, press star one to ask a question. We'll pause for just a moment to allow everyone the opportunity to signal for questions. We have Mr. George Melas on the line.
spk05: Hi, I have a quick question. Yes, hi.
spk04: I have a quick question about the programs, Craig, that you listed, the new programs for the year. My question is, how small... do you take a program? And if you have a $2 million program, it adds complexity because anything adds complexity. Is it worth it? I'm sure it is because you're doing it. But help us understand what's the value of taking a $2 million program, a $10 million program, a $20 million or an 80. I mean, you have lots of small, you have a few elephants. How should one think about that?
spk06: Well, we wouldn't do it if we didn't think it made sense. So you kind of answered your question there. Yeah. And the annual revenue is only one metric. So the smaller programs tend to be higher margin. Typically, a smaller program is something that we've gone after because we believe there's some larger programs after it. Typically a smaller program is in the states where the complexity is more easily digested than it is offshore. And typically a smaller program is less complex. Yes, it's simpler to run than a big one. So there's a whole bunch of metrics that we consider when we decide what we're doing. Every Monday at 1 o'clock, we go through all of the pieces of business in our quote funnel, in our sales funnel, and we decide which ones to keep and which ones to throw out. I will tell you it has been a hell of a lot more fun in the last year when you're looking at a full quote funnel and you can be selective than 10 years ago when you were looking at some pretty barren ground and you had to pick up some rocks that you didn't want to normally pick up.
spk04: Right, right.
spk06: So, I don't know, does that answer your question? Sort of, yeah. Okay, then ask me some more. What did you get?
spk04: My question is always going to be about what is the margin potential of the business?
spk06: What is the margin potential of the business? Yeah. I think if we... If we run even close to what we could, so if we're running in the $600 million range next year for revenue, our margin should be nine plus.
spk05: Okay. And how much goes down to the EBIT line? I would, well,
spk02: I think you're going to have operating expenses as close to 6% at that much volume. Maybe six and a half.
spk05: Yeah.
spk02: Interest, unfortunately, is higher, but that's outside your EBITDA.
spk05: Yeah. And then maybe just the last one for me, under working capital,
spk04: Brett, you talked about 176, so roughly $180 million. Where do you expect to finish fiscal 23 on the working capital side? Do you expect to generate some cash from working capital this year?
spk02: Well, we hope to. That's a long ways out and quite a bit of growth that's anticipated that will require some working capital. But as we've mentioned, we've got too much inventory right now.
spk05: Right, right.
spk04: Do you think it's a good balance and you have flat working capital with increasing AR and declining inventory?
spk06: That's certainly what we're trying to pull off. If we can get the supply chain to be more predictable so we're not ordering $20 million more parts than what we actually end up building in a given quarter, it won't be very hard to get the inventory back down again. But if it continues to be really unpredictable and we have to go back and fight with every single customer every time we've ordered per their forecast and we can't get one part, then it's going to be a rough go to keep those to an offsetting situation.
spk05: Okay, great. Well, we'll be here. Thanks. Thank you. Bye.
spk03: It appears that there is no further question at this time. Mr. Craig, I would like to turn the conference back to you for any additional or closing remarks.
spk06: Okay. Thanks for joining us today.
spk05: We look forward to talking with you next quarter.
spk03: This concludes today's call. You may now disconnect.
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